EX-99 2 exhibit_a.htm EXHIBIT A

Exhibit A
 
 
Ceragon Reports Third Quarter 2016 Financial Results –
November 14, 2016

CERAGON NETWORKS REPORTS THIRD QUARTER 2016 FINANCIAL RESULTS
 
Strategic focus continues to deliver improving net income
 
Little Falls, New Jersey, November  14, 2016 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the third quarter which ended September 30, 2016.
 
Third Quarter 2016 Highlights:
 
Revenues  –  $79.1 million, down 7% from the third quarter of 2015, and up 13% from the second quarter of 2016.
 
Gross margin – 32.9%, compared to 31.9% in the third quarter of 2015, and compared to 34.7% in the second quarter of 2016.
 
Operating income – $5.8 million, compared to $6.2 million in the third quarter of 2015, and $4.0 million in the second quarter of 2016.
 
Net income – Net income of $3.5 million or $0.04 per diluted share for the third quarter of 2016. Net income for the third quarter of 2015 was $1.4 million or $0.02 per diluted share. Net income for the second quarter of 2016 was $0.1 million or $0.00 per diluted share.
 
Non-GAAP results – Gross margin was 33.8%, operating income was $6.9 million, and net income was $4.8 million, or $0.06 per diluted share. For reconciliation of GAAP to non-GAAP results, see attached tables.
 
Cash and cash equivalents – $32.4 million at September 30, 2016 compared to $34.4 million at June 30, 2016.
 
“We continue to reap the benefits of our strategic focus on delivering the most value to best-of-breed oriented customers,” said Ira Palti, president and CEO of Ceragon. “In Q3, we reported the highest net income in many quarters. We are targeting significant improvement in our net income in 2016, and further improvement in 2017 as well.”
 
Supplemental geographical breakdown of revenue for the third quarter of 2016:
 
·
Europe:                      13%
·
Africa:                        8%
·
North America:         10%
·
Latin America:          30%
·
India:                          31%
·
APAC:                        8%
Ceragon Reports Third Quarter 2016 Results
 
A conference call to discuss the results will begin at 9:00 a.m. EDT on November 14, 2016. Investors are invited to join the Company’s teleconference by calling USA: (800) 230-1059 or International: +1 (612) 234-9959, from 8:50 a.m. EDT. The call-in lines will be available on a first-come, first-serve basis.
 
Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://www.ceragon.com/about-us/ceragon/investor-relations, selecting the webcast link, and following the registration instructions.
 
If you are unable to join us live, the replay numbers are: USA: (800) 475-6701 or International +1 (320) 365-3844 Access Code: 403910. A replay of both the call and the webcast will be available through December 15, 2016.
 
About Ceragon Networks Ltd.
 
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 4G, mission-critical multimedia services and other applications at high reliability and speed. Ceragon’s unique multicore technology provides highly reliable, high-capacity 4G wireless backhaul with minimal use of spectrum, power and other resources. This technology enables increased productivity, as well as simple and quick network modernization. We deliver a range of professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Our solutions are deployed by more than 460 service providers, as well as hundreds of private network owners, in more than 130 countries.
 
Join the Discussion
            
 
Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.
 
This press release contains statements concerning Ceragon's future prospects that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon's management. Examples of forward-looking statements include: revenues, growth prospects, projections of gross margins, operating and other expenses, capital expenditures, profitability and liquidity, competitive pressures,  product development, financial resources, cost savings and other financial matters. You may identify these and other forward-looking statements by the use of words such as "may" "plans" "anticipates" "believes" "estimates" "targets" "expects" "intends" "potential" or the negative of such terms, or other comparable terminology. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the risk that Ceragon’s expectations regarding future revenues and profitability will not materialize; risks relating to the concentration of our business in India, Latin America, Africa and in developing nations in other regions, including political, economic and regulatory risks from doing business in those regions and nations, including in relation to local business practices that  may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery regulations , currency export control issues and recent economic concerns; the risk that the business coming from our bigger customers will go down significantly or cease, the risk that Ceragon will not achieve the benefits it expects from its expense reduction plans and profit enhancement programs, as may be implemented from time to time; the risk of significant expenses in connection with potential contingent tax liability; and other risks and uncertainties detailed from time to time in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements. 
 
Investors:
Doron Arazi                          or          Claudia Gatlin
+972 3 5431 660                                  +1 212 830 9080
dorona@ceragon.com                      claudiag@ceragon.com
 
Media:
Tanya Solomon
+972 3 5431 163
tanyas@ceragon.com
 
-tables follow-
2
Ceragon Reports Third Quarter 2016 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
Revenues
  
$
79,132
    
$
85,367
    
$
208,976
    
$
273,792
  
Cost of revenues
    
53,094
      
58,156
      
137,357
      
195,647
  
                                 
Gross profit
    
26,038
      
27,211
      
71,619
      
78,145
  
                                 
Operating expenses:
                                
Research and development
    
5,339
      
5,493
      
15,977
      
17,662
  
Selling and marketing
    
9,608
      
10,045
      
29,181
      
30,834
  
General and administrative
    
5,328
      
5,501
      
15,438
      
15,762
  
Restructuring costs
    
-
      
-
      
-
      
1,225
  
                                 
Total operating expenses
    
20,275
      
21,039
      
60,596
      
65,483
  
                                 
Operating income
    
5,763
      
6,172
      
11,023
      
12,662
  
                                 
Financial expenses, net
    
1,519
      
2,966
      
4,809
      
12,473
  
                                 
Income before taxes
    
4,244
      
3,206
      
6,214
      
189
  
                                 
Taxes on income
    
761
      
1,763
      
3,118
      
4,410
  
                                 
Net income (loss)
  
$
3,483
    
$
1,443
    
$
3,096
    
$
(4,221
)
                                 
Basic net income (loss) per share
  
$
0.04
    
$
0.02
    
$
0.04
    
$
(0.05
)
                                 
Diluted net income (loss) per share
  
$
0.04
    
$
0.02
    
$
0.04
    
$
(0.05
)
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
77,711,946
      
77,221,170
      
77,680,541
      
77,179,760
  
                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
79,284,558
      
77,355,761
      
78,286,712
      
77,179,760
  

3
Ceragon Reports Third Quarter 2016 Results
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
September 30,
2016
    
December 31,
2015
  
   
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
32,374
    
$
36,318
  
Trade receivables, net
    
109,615
      
116,683
  
Deferred taxes
    
534
      
1,633
  
Other accounts receivable and prepaid expenses
    
20,868
      
22,583
  
Inventories
    
44,182
      
49,690
  
Total current assets
    
207,573
      
226,907
  
                 
NON-CURRENT ASSETS:
                
   Deferred tax assets, net
    
-
      
189
  
   Severance pay and pension fund
    
4,546
      
4,681
  
   Property and equipment, net
    
26,748
      
28,906
  
Intangible assets, net
    
1,958
      
3,192
  
   Other non-current  assets
    
1,738
      
1,457
  
Total long-term assets
    
34,990
      
38,425
  
Total assets
  
$
242,563
    
$
265,332
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Short term loan, including current maturities of long term bank loan
  
$
20,300
    
$
34,922
  
Trade payables
    
64,212
      
71,721
  
Deferred revenues
    
4,426
      
8,901
  
Other accounts payable and accrued expenses
    
23,383
      
27,052
  
Total current liabilities
    
112,321
      
142,596
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
9,310
      
9,276
  
Other long term payables
    
12,569
      
10,639
  
Total long-term liabilities
    
21,879
      
19,915
  
SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
214
      
214
  
Additional paid-in capital
    
409,114
      
408,174
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(7,110
)
    
(8,616
)
Accumulated deficits
    
(273,764
)
    
(276,860
)
                 
Total shareholders' equity
    
108,363
      
102,821
  
                 
Total liabilities and shareholders' equity
  
$
242,563
    
$
265,332
  

4
Ceragon Reports Third Quarter 2016 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2016
    
2015
    
2016
    
2015
  
Cash flow from operating activities:
                        
Net income (loss)
  
$
3,483
    
$
1,443
    
$
3,096
    
$
(4,221
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
                                
Depreciation and amortization
    
2,527
      
2,844
      
7,503
      
9,066
  
Stock-based compensation expense
    
281
      
600
      
873
      
1,172
  
Decrease (increase) in trade and other  receivables, net
    
(19,180
)
    
17,306
      
11,323
      
36,662
  
Decrease in inventory, net of write off
    
4,565
      
1,563
      
6,168
      
11,211
  
 Increase (decrease) in trade payables and ccrued liabilities
    
8,269
      
(13,140
)
    
(10,176
)
    
(38,471
)
Increase (decrease) in deferred revenues
    
459
      
(3,176
)
    
(4,475
)
    
(7,604
)
Decrease in deferred tax asset, net
    
84
      
988
      
1,289
      
2,441
  
Other adjustments
    
276
      
(595
)
    
168
      
(784
)
Net cash provided by operating activities
  
$
764
    
$
7,833
    
$
15,769
    
$
9,472
  
Cash flow from investing activities:
                                
    Purchase of property and equipment
    
(1,825
)
    
(847
)
    
(5,433
)
    
(4,320
)
   Investment in short-term bank deposits
    
-
      
(15
)
    
(153
)
    
(19
)
   Proceeds from short-term bank deposits
    
153
      
-
      
153
      
64
  
    Proceeds from sale of available for sale marketable securities, net
    
-
      
-
      
-
      
122
  
                                 
Net cash used in investing activities
  
$
(1,672
)
  
$
(862
)
  
$
(5,433
)
  
$
(4,153
)
                                 
Cash flow from financing activities:
                                
Proceeds from exercise of options
    
60
      
112
      
67
      
112
  
Proceeds from issuance of shares, net
    
-
      
-
      
-
      
-
  
Proceeds from bank loans
    
-
      
-
      
-
      
4,200
  
Repayment of bank loans
    
(1,150
)
    
(7,058
)
    
(14,622
)
    
(11,174
)
Net cash used in financing activities
  
$
(1,090
)
  
$
(6,946
)
  
$
(14,555
)
  
$
(6,862
)
                                 
Translation adjustments on cash and cash equivalents
  
$
(5
)
  
$
(356
)
  
$
275
    
$
(676
)
Decrease in cash and cash equivalents
  
$
(2,003
)
  
$
(331
)
  
$
(3,944
)
  
$
(2,219
)
Cash and cash equivalents at the beginning of the period
    
34,377
      
39,535
      
36,318
      
41,423
  
Cash and cash equivalents at the end of the period
  
$
32,374
    
$
39,204
    
$
32,374
    
$
39,204
  

5
Ceragon Reports Third Quarter 2016 Results
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
September 30,
     Nine months ended
September 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
GAAP cost of revenues
  
$
53,094
    
$
58,156
     $
137,357
    
$
195,647
  
Amortization of intangible assets
    
(309
)
    
(310
)
    
(922
)
    
(919
)
Stock based compensation expenses
    
(5
)
    
(34
)
    
(26
)
    
(44
)
Changes in pre-acquisition indirect tax positions
    
(403
)
    
(129
)
    
(806
)
    
(277
)
Non-GAAP cost of revenues
  
$
52,377
    
$
57,683
     $
135,603
    
$
194,407
  
                                 
GAAP gross profit
  
$
26,038
    
$
27,211
     $
71,619
    
$
78,145
  
Gross profit adjustments
    
717
      
473
      
1,754
      
1,240
  
Non-GAAP gross profit
  
$
26,755
    
$
27,684
     $
73,373
    
$
79,385
  
                                 
GAAP Research and development expenses
  
$
5,339
    
$
5,493
      
15,977
    
$
17,662
  
Stock based compensation expenses
    
(8
)
    
(215
)
    
(134
)
    
(556
)
Non-GAAP Research and development expenses
  
$
5,331
    
$
5,278
     $
15,843
    
$
17,106
  
                                 
GAAP Sales and Marketing expenses
  
$
9,608
    
$
10,045
     $
29,181
    
$
30,834
  
Amortization of intangible assets
    
(105
)
    
(280
)
    
(311
)
    
(489
)
Stock based compensation expenses
    
(96
)
    
(173
)
    
(315
)
    
(386
)
Non-GAAP Sales and Marketing expenses
  
$
9,407
    
$
9,592
     $
28,555
    
$
29,959
  
                                 
GAAP General and Administrative expenses
  
$
5,328
    
$
5,501
     $
15,438
    
$
15,762
  
Stock based compensation expenses
    
(174
)
    
(178
)
    
(399
)
    
(186
)
Non-GAAP General and Administrative expenses
  
$
5,154
    
$
5,323
     $
15,039
    
$
15,576
  
                                 
GAAP financial expenses
  
$
1,519
    
$
2,966
     $
4,809
    
$
12,473
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
907
      
(2,973
)
Non-GAAP financial expenses
  
$
1,519
    
$
2,966
     $
5,716
    
$
9,500
  
                                 
GAAP taxes on income
  
$
761
    
$
1,763
     $
3,118
    
$
4,410
  
Changes in pre-acquisition tax liability
    
-
      
-
      
(453
)
    
-
  
Other non-cash tax adjustments
    
(189
)
    
(945
)
    
(677
)
    
(2,535
)
Non-GAAP taxes on income
  
$
572
    
$
818
     $
1,988
    
$
1,875
  
 
 
6
 
Ceragon Reports Third Quarter 2016 Results
 
ECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
GAAP net income (loss) 
  
$
3,483
    
$
1,443
    
$
3,096
    
$
(4,221
)
Amortization of intangible assets
    
414
      
590
      
1,223
      
1,408
  
Stock based compensation expenses
    
283
      
600
      
874
      
1,172
  
Restructuring expenses
    
-
      
-
      
-
      
1,225
  
Changes in pre-acquisition tax exposures
    
403
      
129
      
1,259
      
277
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
(907
)
    
2,973
  
Non-cash tax adjustments
    
189
      
945
      
677
      
2,535
  
Non-GAAP net income 
  
$
4,772
    
$
3,707
    
$
6,232
    
$
5,369
  
                                 
GAAP basic and diluted net income (loss) per share
  
$
0.04
    
$
0.02
    
$
0.04
    
$
(0.05
)
                                 
Non-GAAP basic and diluted net income (loss) per share
  
$
0.06
    
$
0.05
    
$
0.08
    
$
0.07
  
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
77,711,946
      
77,221,170
      
77,680,541
      
77,179,760
  
                                 
Weighted average number of shares used in computing GAAP diluted net income (loss) per share
    
79,284,558
      
77,355,761
      
78,286,712
      
77,179,760
  
                                 
Weighted average number of shares used in computing Non-GAAP diluted net income per share
    
79,780,138
      
78,011,917
      
78,682,661
      
77,868,331
  
 
7